65 N.Y.S. 920 | N.Y. App. Div. | 1900
On the 15th of August, 1898, the defendant John Foley sold to the plaintiff his gold pen manufacturing business with all the rights, privileges and good will appertaining thereto, including the trade mark and all the stock of goods, materials, machinery, show cases and fixtures of every kind appertaining to the business.. The consideration for the sale was $4,000 paid in cash and an agreement to pay $11,000 out of the profits of the business at specified times. The interest on the $11,000 was to be paid quarterly irrespective of the fact whether there were profits or not. This deferred payment was secured by a mortgage upon the property sold, given by the plaintiff to the defendant Elma Foley. The plaintiff took possession under his contract on the 24th of August, 1898. He continued in possession until the latter part of January, 1899, when he rescinded the contract, tendered back to Foley all he had received and demanded that the mortgage be canceled and that Foley should pay back to him the $4,000 he had paid. This demand being refused, the plaintiff brought this action, offering to deliver up all that he liad received under the contract and asking judgment that the mortgage to Elma Foley be canceled and discharged, that the contract be
The complaint as originally served contained very general allegations as to the false representations, and upon the trial, when it was attempted to prove them, it was objected that they had not been properly pleaded. Application was. then made to amend the complaint, which, although opposed by the defendants, was granted, and the pleadings were thereupon amended by setting out the representations which the plaintiff claimed had been made and their falsity. It is objected that this ruling of the court was erroneous. This was clearly one of' the amendments authorized by section 723 of the Code of Civil Procedure, and its granting is very largely in the discretion of the court to. whom the application is made and, unless it appears that injustice was done by allowing the amendment, the act should not be reversed in the appellate court. We cannot see that any injustice was done to the defendants by permitting this amendment to be made, although it was stated, when it was suggested that such an application would be made, that the defendants could not meet the evidence. But it is quite apparent from an examination of the record that the defend-ants were able to introduce testimony bearing upon every fact set up in the amended complaint, and they made no application for a postponement, as they should have done had they been surprised by the amendment, so as to be unable to meet the plaintiff’s case. There is no reason, therefore, why the judgment should be overthrown because of that amendment.
It appears from the testimony that the negotiations leading up to the contract were had between the plaintiff and his father on the one hand and the defendant John Foley and his wife Elma on the other, Mrs. Foley being present but taking no important part in the negotiations. Their attention was' called to the fact that the property was for sale by an advertisement which is found in the case, and which stated that the business was of great merit, the articles patented, long established, the average profits over $15,000, and describes the property to be sold as consisting of a valuable business, with stock, fixtures, factory, handsome Broadway establishment complete, with use of the owner’s name. ■ Upon seeing this advertisement, the father of the plaintiff went to Foley and made inquiries with respect to the property to be sold. His testimony is that both he and his son, the plaintiff, were absolutely ignorant of the nature and value of the business or property, and relied solely upon what Foley told to him. Foley said he wanted to sell his gold pen business and everything appertaining to it; that the business was very valuable ; that he had made $15,000 a year on the average; that he was selling out simply because of his bad health, which forbade him to engage in it any longer; that $30 to $50 a day were taken in over the counter; that the stock on hand was salable and worth $5,000, and he made various other representations as to the value of the articles sold, the value of the trade mark and the extent to which he w7as able to control the trade. He stated the machinery to be particularly valuable and especially made for him, and to be admirably adapted to the manufacture of gold pens, and that it could not be replaced for less than $15,000; that one reason his pens were so desirable was because of the excellence of this machinery. In addition, Foley stated to the plaintiff at the time the contract was signed
There is another class of representations, however, not purely of fact, but representing to a very considerable extent the opinions of the defendant. These were the statements that the machinery was worth $15,000 and that the stock was worth $5,000. It is quite clear from the testimony that these values were grossly exaggerated, and we must assume that they had great weight with the plaintiff in inducing him to enter into the contract, and the question is whether they were such' as he had the right to rely upon in deciding to make the contract. In the case of Ellis v. Andrews (56 N. Y. 83) it is said that a false statement as to the value
It is said, however, that the finding of the court was not warranted by the evidence, and upon this point great stress is laid upon the fact that the defendant was willing to take a mortgage as part of the purchase price, all of which, excepting the interest, was to be paid out of the profits of the business. Undoubtedly this is entitled to consideration, but it is not sufficient to overthrow the other inferences in this case. There is no dispute that the plaintiff paid to the defendant $4,000 in money, and a careful examination of the record leads to the conclusion that a finding that the actual value of the property was not equal to this sum would not be set aside as against the evidence, because the stock was not worth over $3,000, and the value
It is claimed, however, that because of the plaintiff’s delay in making the rescission he has lost his right to do so. The plaintiff took possession on the 24th of August, 1898. It was a business property. The business had undoubtedly been neglected for along time because of the ill-health of Foley, and of that fact the plaintiff became aware shortly after he took possession. There is no doubt, and it was stated by Foley in his letters, that it would take some time to bring the business back to the place it occupied before his illness, and although the plaintiff expressed his disappointment about the state of the business very shortly after he had taken possession, yet the letters of Foley show that he was then told that this was his own fault; that he had not yet been in possession long enough to make the business a success and that he ought to continue. It is fair to assume that the delay in rescinding was due almost entirely to the statements of Foley himself that if the plaintiff should continue in the business he would undoubtedly be able to make it a success. For this reason we think that the delay of some months, which ordinarily would not be permitted, was in this case excused.
It is also said that the business failed to be a success because of the incompetency of the plaintiff. In respect of this matter all that is necessary to be to be said is that the action was brought to rescind the contract because of the false representations of the defendant as to the condition of the business and property at the time the sale was made; and if it was not as Foley stated it to be at that time the inability of the plaintiff to make the business a success affords no reason why he should not rescind the contract because of the false statements.
So far as Foley is concerned, the judgment should be affirmed ; but the judgment not only cancels the mortgage which was given
Patterson and Hatch, JJ., concurred; Van Brunt, P. J., and O’Brien, J., dissented.
Judgment modified as directed in opinion, and as modified affirmed, with costs to plaintiff as against John Foley and without costs as against Mrs. Foley.